At just 27 years old, my guest has already built a net worth of over $100,000 and is well on her way to financial independence. But what does it take to grow your wealth at such a young age? How do you stay disciplined, save aggressively, and still enjoy life in your 20s? Today, we’re diving deep into her mindset, strategy, and the steps she’s taking to achieve financial independence. Whether you’re starting out or well on your way, this episode is great for one and all.
Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and Scott Trench is playing hooky today. So, you just have me. I am here to remind you that BiggerPockets has a goal of creating one million millionaires. You are in the right place if you want to get your financial house in order because I truly believe financial freedom is attainable for everyone, no matter when or where you are starting. Today we’re going to discuss ways to invest early with a salary below six figures, how to pay down $80,000 of student loans, and answer the question, should you have a FI number? Anna, thank you so much for joining me today. I’m so excited to talk to you.
**Anna**: Yeah, thanks for having me.
**Mindy Jensen**: How long have you been investing?
**Anna**: So I started investing when I graduated college back in 2021. I just started out with my 401k. That’s how most people start out. I didn’t really know exactly what I was doing. Luckily, my older brother helped me out a bunch. He taught me all about investing and personal finance and what I should be doing. So, he eventually told me I should open up a Roth IRA. So then I also got into that. So it’s been about three or four years.
**Mindy Jensen**: So he said you should invest in a Roth. What did he specifically teach you about investing in personal finance?
**Anna**: So he kept it pretty simple. He said that index funds are the way to go, right? That’s not new news. That’s what all the finance people tell you to do. So he said just automate your investments, you know, set it into a retirement account or a taxable brokerage and just let it, let it go.
**Mindy Jensen**: Okay. So you’re right. This isn’t new. This isn’t, uh, sexy. This isn’t, you know, groundbreaking information, but it is absolutely the simple path to wealth. Oh, see what I did right there? Have you read that book?
**Anna**: I have. That’s a good one.
**Mindy Jensen**: What made you start investing right when you graduated college?
**Anna**: I think a lot of it was my older brother. Like, I didn’t really know much about investing at all. I mean, growing up, we never talked about money, we didn’t talk about investing. So I really leaned on him to give me advice and help me out. And it was kind of like, you know, you hear about 401ks and you don’t really know what they are until all of a sudden you’re graduating and now it’s like, oh shoot, what actually is a 401k? How does it work? So I asked him all those questions. He taught me the importance of it, right? Getting your employer match, just starting out that muscle of investing at a young age and get the habit of doing it and carry that through, you know, your 20s, 30s, 40s.
**Mindy Jensen**: Anna, do you invest anything in real estate?
**Anna**: I do not currently invest in real estate. I don’t even own a primary residence either. We are currently renting.
**Mindy Jensen**: Okay. And why are you currently renting?
**Anna**: So we started renting right out of college. My husband and I graduated about a year apart and we just rented an apartment while I was finishing up my grad school year. And then once I graduated, we moved to a house and just started renting that. We were kind of deciding like, where do we want to end up? You know, we’re currently on the east side of Michigan near Detroit, but our family’s from the west side of Michigan. So we’re kind of in limbo between jobs and things of like, where should we end up? What should we do? We didn’t really have a good good answer and didn’t know what we wanted to do. So we decided renting was the best option.
It was also around 2020 when prices were starting to climb and then they just kept climbing. So real estate was really expensive and we didn’t have any cash to buy a home or to put a down payment down. So at first it sounded like buying would be really nice, right? Like in 2019, home prices were pretty low, you could put a small amount down and your mortgage could be reasonable, right? Like you could pay 1200, 1500 for a mortgage. In the Detroit area of course, not in all places of the country, but we’re pretty lucky to be in the Midwest.
So then as prices got more and more expensive, we were like, okay, we can buy a home now, but if we buy a home, the mortgage is probably going to be closer to 2500, right? So we decided to stick with our current situation. We’re renting a three bed, two bath for $1,800 a month in the Detroit area versus buying a home now that’s equal or more house and our housing costs would go up, you know, $700 a month or more. So right now it doesn’t make a whole lot of sense for us to buy. We still don’t know where we want to be long term for sure. So that’s the biggest thing. I think real estate is great if you’re going to live in it for a long time and you’re not planning to just hop around and sell it or if you’re planning to keep it as an investment property or use it as an income generation. But if you’re just going a to talk about primary homes, I don’t think that buying is always the right move for every person.
**Mindy Jensen**: And that’s because you’re right. Buying is not always the right move for every person. Ramit Sethi says it best. He says, when you own a home, your mortgage is the least you’ll pay monthly. But when you rent, your rent payment is the most you’ll pay monthly. If something breaks, your landlord fixes it. And what you’re saying to me says that you’ve thought this through. I think there’s a lot of people who buy a house because it’s the American dream and that’s what you do. You graduate a from college and then you buy a house. You don’t have to buy. And I say that as a lover of real estate. I’m a real estate investor, I’m a real estate agent. I work at BiggerPockets. I mean, real estate is my jam, but it’s not for everybody. And also, if everybody owned, then there would be no tenants. So it’s perfectly fine for you to be a renter. I just wanted to get that out there because I like, I like the way that you’re thinking about it and the fact that you are thinking about it.
**Anna**: Yeah, I like what you said about how people just think that they should be buying and that’s my favorite thing now is to ask people why they want to buy a home. And if they have a good reason, sure, there’s there’s lots of reasons to buy a home, right? You want to grow roots, you want to start a family, all that stuff makes perfect sense. But when people say, I don’t know, isn’t that just what people do? And it’s like, no, you don’t have to buy a home if you’re not ready yet. You can still figure it out. You can rent your whole life, right? Ramit Sethi still rents to this day. He doesn’t want to own. That’s amazing. You know, if that’s what you want to do, do it.
**Mindy Jensen**: Yeah, exactly. And that’s, but again, with Ramit, he’s thinking about it and he has decided based on thought, not just, oh, everybody else is doing this. He’s decided I don’t want to be an owner, so I’m not going to be an owner. And, you know, he’s, he’s got a reason behind it. Do you ever see yourself buying a house or investing in real estate?
**Anna**: Yeah, I definitely see myself buying a home. My husband wants to buy a house much more than I do at this point, but I think I’m going to let him have that one and we will buy a home eventually and we’re wanting to start a family soon. So we a will own a home probably in the next five years. But as far as investing in real estate goes, haven’t quite figured out what we’re going to do. He doesn’t like the idea of being a landlord, so I’m trying to push him on that a little bit. But I think the plan will be to focus on index funds and investing in the stock market, you know, in our 20s and maybe our 30s. And then in our 40s or 50s, when we’ve maybe got some more free time and more money, maybe jump into real estate investing.
**Mindy Jensen**: And, you know, real estate investing isn’t for everyone. There are plenty of people who listen to this show who have no interest in investing in real estate and are still reaching financial independence. I think real estate is a great way to get there, but it’s definitely not the only way to get there. a And there’s all different levels of real estate investing. So when you’re ready, come to biggerpockets.com, review the forums, go in there and see what different kinds of investing people are doing. We have a a new podcast in our podcast network called Passive Pockets, which focuses on syndication deals. And if you are investing in a syndication deal, you give them money and then that’s the end of your responsibility. So you don’t have to be a landlord. You’re not getting the phone calls from the tenant saying, “Hey, there’s something wrong with the property.” Um, it’s a great way to invest in real estate without having to be on the phone with your tenants all the time. It does have some, some risk and, you know, that’s why we created this, this new podcast called Passive Pockets so that you can start to learn how to invest in syndications. Not all syndications are made the same. So when you’re ready, give me a call, we’ll chat. We’re going to take a quick break before we hear more from Anna Foley on how she was able to wipe out $80,000 of debt in under four years.
Welcome back to the show. So let’s look back to your financial snapshot when you graduated a from college. You had $80,000 in student loan debt? Or you had $80,000 in debt?
**Anna**: $80,000 in student loans between my husband and I. So he graduated in December of 2019 and he had about $60,000 in debt and then I graduated in May of ’21 and I had about $20,000. So total we had about 80 in student loans and then we also had a car that was about $14,000. So when we graduated, when he graduated in 2019, our net worth was like -95,000 and then when I graduated in ’21, our net worth was like -75,000. So we’d made some progress just paying the minimums on his student loans and the car. But yeah, just working through that.
**Mindy Jensen**: And how did you pay down that $80,000? How long did it take and what steps did you take to make it happen?
**Anna**: So it took us about three and a half years and the biggest thing we did was at the beginning of every month, we made a plan for how much we wanted to put towards our student loans. And each time we got paid, we would send that money directly to the student loans before we could even use it, right? Because if we were going to wait until the end of the month, that money was going to go somewhere. We were going to find something to spend it on. So we made sure that we put that money towards the student loans right away. And over those three years, we did increase our income. So every time we got a raise, yes, we had some fun, but we also made sure that we were using that extra money to pay off our loans quicker. So just really staying disciplined and focusing on making those payments every month.
**Mindy Jensen**: So when my husband was paying off his student loans, I was, we’re old, so we were writing checks. You didn’t pay it online because the internet didn’t exist. And we, I wrote that last check and I was like, this is the best check I’ve ever written. Goodbye student loans. How great did it feel to be out of debt?
**Anna**: It did feel really good. It was a long time coming. We originally planned, I think, to finish paying off our loans at the end of this year or next year. But because we were able to increase our income, we paid it off quicker than we expected. So it was felt even better that we got it done quickly. And then what was really nice about it, we were allocating all this money towards our student loans. And then as soon as that was paid off, we’re like, oh, what do we do with that money now? Let’s just start investing it, right? So it’s really easy to make that transition to investing after we paid off our debt.
**Mindy Jensen**: So paying off $80,000 in three and a half years, how much were you making at the time?
**Anna**: So when Brett graduated in 2019, he started off making like $60,000 a year. I was still in school, so I was probably making 20 to 30 just through my internship. But over that time, once I graduated, I started making, you know, low 60s as well. So we were up to 120 gross income. and and then over the last couple years. I’ve gotten a few raises and worked overtime to make more. So I’m up to about $80,000. And Brett has jumped around to a couple of different jobs and he’s now up to 105. So last year our gross income was around $190,000. So it went from about, you know, 100, 120 up to 190.
**Mindy Jensen**: And that’s awesome. That is how you pay off $80,000 in student loans in three and a half years, is you steadily increase your income, you put the money to the loans first. This sounds a lot like when people say, “Oh, you pay yourself first.” So you take your your paycheck and you put X percentage into your savings, 20%, 40%, whatever you’re choosing, you put that into savings, you don’t even see it to spend it. When you put the money to the loans, you’ve already made your payment and now you have the rest of the money to do with as you choose. As opposed to like you said, if you leave it till the end of the month, you are absolutely going to find a way to spend that a. What are the investing vehicles that you’re currently using to help you towards financial independence? Are you still solely in index funds?
**Anna**: Yes, we still are 100% in index funds. Um, all of my stuff is with Fidelity, so I’m in FXAIX, just S&P 500 a all the way. Um, Brett has his 401k through Principal and they don’t have the best options for investing. So we picked the best one they have. I think it’s a S&P 500 equivalent, just has a higher expense ratio on it. But yeah, all of our, all of our investing is in index funds currently.
**Mindy Jensen**: I love that. Now you mentioned a Roth IRA and a 401k. Are you maxing those out?
**Anna**: We are both maxing out our Roth IRAs. We’re not maxing out our 401ks. We’re contributing up to the employer match right now. And then Brett also has an HSA that he’s maxing out.
**Mindy Jensen**: Okay. And what are you doing with, I don’t want to say the extra because there’s no such thing as extra money. What are you doing with the remainder?
**Anna**: Right now we’re saving actually potentially for a house in the next few years. So we’ve been trying to save, you know, two or $3,000 a month. Uh, we were saving up for a car, we just bought a car and then now we’re gonna start transitioning to saving for a house.
**Mindy Jensen**: And do you have any sort of after-tax brokerage investments?
**Anna**: Not yet. I’ve been thinking about opening one of those up and just starting to get that ball rolling, but it’s hard to give up the tax advantage of, you know, all the retirement accounts. So kind of struggling with that decision on which, which one I should do.
**Mindy Jensen**: Yes. Well, I totally understand that. a Um, we have an episode about the middle-class trap where you are a millionaire on paper, you’ve got a million dollars or more in your retirement account, in your, like in your 401k, in your, uh, home equity, but you don’t have any way to really access that without, you know, paying penalties and, a uh, what have you. And that is episode 543. I encourage you to go and listen to that one just to prevent yourself from becoming, I mean it’s, it’s a, not a terrible position to be in. You know, you’re 40 years old and you’re a millionaire. You just can’t access any of it without paying penalties. So, a uh, the cure to that, if you haven’t gotten to 40, if you’re younger, you should start a, an after-tax brokerage account so you do have access to funds. You can always access the money you put into your Roth, but not the gains, um, before you’re 59 and a half, I think, and I’m sure I’m saying that wrong and somebody is going to email mindy@biggerpockets.com to tell me about that. Uh, but you do, you know, hedge your bets and do an after-tax brokerage account so you can access those funds earlier. Another way to access those funds if you are, I hate the way that I’m wording this, but I can’t think of a different way. If you have fallen victim to the middle-class trap, we just did an episode with Eric Cooper about the 72T where you can access your retirement funds early through separate but equal periodic payments, which means you have to take out the exact same amount every single year. So there are ways to access it, but not even having to do all that monkey business is even better.
**Anna**: Yeah, for sure. I did actually just listen to that episode. It was a good one.
**Mindy Jensen**: Yeah, I, oh, I love Eric, he’s so great. Anna, what would you guess your savings rate is?
**Anna**: So far this year, our average monthly savings rate has been around 43%. So some months are like a little bit above 30, some we’re in the 50s. So it just depends month to month. But yeah, a pretty good average. It was actually higher than I expected. I hadn’t really tallied it up for what the average was this year yet and it was higher than I expected. But yeah, I’m happy with it.
**Mindy Jensen**: Okay, I’m going to challenge our listeners right now. If you have a savings rate, if you are able to be saving instead of spending everything that’s coming in, what is your savings rate? Email me mindy@biggerpockets.com. I’m so curious just to see, I’m not going to name names, I won’t read this on air, but I think it would be interesting to say, oh, the average
